City officials float the idea of regional taxation in Michigan

Day 26: This is one in a series of posts assessing key developments during Gov. Rick Snyder's self-imposed 182 days to chart a new course for Michigan by July 1. For earlier posts go to mlive.com/stateofchange.

Michigan’s city leaders are ready to embrace Gov. Rick Snyder’s call to save money by delivering services more efficiently, but they want lawmakers to help out too.

Dan Gilmartin, MML’s executive director, said the state should consider allowing the collection of regional taxes for specific services such as transportation or public safety. A new regional tax, which would require local voter approval, could be a property tax, income tax or sales tax.

Regional property or income taxes could require legislative approval. A regional sales tax might require asking voters statewide to amend the state’s constitutional sales tax cap of 6 percent. States like Illinois levy a statewide 6.25 percent sales tax. With local additions, the overall rate is 9.75 percent in the city of Chicago.

Local income and property tax collections have been walloped in recent years. Given tax limitations in the constitution and declining property values, it could take years for municipalities to get back to the level of property tax revenue collected in 2000.

Since 2000, moreover, Lansing has shorted local government revenue sharing payments by some $4 billion. A 15-percent cut in revenue sharing in the 2012 budget would cost local governments another $60 million.

Snyder spoke with the MML's board of directors Friday and said revenue sharing could be altered to provide incentives for regional cost sharing. The fear among local officials is that revenue sharing will be cut without the necessary legislation that makes cost sharing feasible.

League officials said Wednesday said cities can’t join together to provide shared services without changes in state law that currently require employees to be paid at the highest rate provided by a unit of government participating in the merger.

Cities also want the authority to eliminate the December billing and consolidate all property tax collections in the summer. Another measure would amend state binding arbitration law so that in resolving impasses with police and fire unions, an arbitrator would have to consider a city’s ability to pay.

“Our goal is to create communities that are more competitive for the next 50 years, not the last 50 years,” Gilmartin said. “Michigan’s economic comeback is rooted in communities that are competitive for the 21st Century.